I am currently the managing director of Sapient Global Markets and e.v.p. of Sapient Corporation and have been voted one of the top 25 consultants in the world, specifically for my work in the energy sector. Prior to joining Sapient, I built and managed trading groups around the world for large merchant traders including Louis Dreyfus in Connecticut, Essent Energy in the Netherlands and Weyerhaeuser in Toronto. I also spent ten years developing trading capabilities for investment banks UBS in New York and CIBC in Toronto.

Bill Gates Is Just Plain Wrong On Climate 'Miracle'

Bill Gates probably isn’t the first person that comes to mind when you think about energy. The billionaire co-founder of MicrosoftMicrosoft is better associated with computers and philanthropy than he is with oil and gas. But Gates is actually an active investor and thought leader in the energy community and has been for many years now, especially in the area of energy technology.

Cards on the table, I am a fan of his and have been following his investments and views on the energy sector with great interest for a while now. We share many points of view on energy, such as the positive impact pending innovations in electricity storage and fourth generation nuclear power could ultimately have on the energy landscape. But while our views are mostly aligned, in this case we part ways. In his recent blog post entitled “We Need Energy Miracles,” Gates seems to have really shanked one off into the woods. Here’s why.

The premise of the post is essentially that the U.S. needs to initiate a major R&D campaign aimed at doing for climate change what the nation did a generation ago with vaccines. Here’s an excerpt:

I often talk about the miracle of vaccines. With just a few doses, they protect children from deadly diseases forever. When it comes to clean energy, we need breakthroughs that are just as miraculous. Just like vaccines, clean-energy miracles don’t just happen by chance. We have to make them happen, through long-term investments in research and development. Unfortunately, right now neither the private sector nor the U.S. government is making anywhere near the scale of investment it takes to produce these breakthroughs.

However noble such sentiments might be, they none the less suffer from at least four fatal flaws in their logic.

Flaw #1: Who is ‘We’?

Gates begins his post by showing the following chart on global carbon emissions as a bit of “shock and awe” to grab the reader’s attention. Lacking further context, one might assume that the U.S., who he believes should bear the financial burden of this crusade as the world’s largest energy consumer, is responsible for the bulk of the rise in emissions.

While the picture is technically accurate, it is a bit simplistic. Here’s a slightly more nuanced reading of the situation prepared using EIA data. It shows the U.S. dropping from a quarter of worldwide emissions to under 20% in the next decade and a half while China rises from 10% to almost a full third.

Now, while Gates says “we” (United States) need a major breakthrough in emissions management, he fails to credit that the U.S. recently found one: fracking. Indeed, largely due to the increased production of natural gas following the advent of hydraulic fracturing and horizontal drilling, which began in style about a decade ago, carbon emission in the United States have actually fallen to levels close to those of 1990.

As natural gas prices fell from near ten dollars to under four per mmBTU of gas, electric utilities began switching from coal to the cheaper (and cleaner) fuel, leading to decreased carbon emissions, thus slowing the national growth rate significantly.

China on the other hand has massively increased the amount of pollution they are driving into the atmosphere. BP projects that by 2035 China and India together will create far more emissions than the entire OECD.

Now I am certainly not indicting these fast growing economies. The Industrial Revolution in the West left scars that are still visible in the broader ecology. But it does beg the question “Who is We?” when considering where such research should be targeted and from where it should be financed.

Flaw #2: Aren’t We Already Investing Anyway?

Gates then moves to another picture which, again, is easily misread without context.

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